Do you know that over 90% of Vietnamese enterprises consist of small and medium-sized businesses (SMBs)? They have an important role in the economy, contribute 45% of the total GDP of Vietnam, 31% of the national treasury income. Despite the essential role in the economy, SMBs don’t have as many opportunities to develop as foreign invested companies (FICs) or state-owned companies (SOCs). There are some reasons behind that problem.
Higher loan fees and more complex procedures
The costs for capital raising solutions, such as bank loans, is higher than that of SOCs and FICs. For example, bank loans take much more time, effort, and money to SMBs than to big enterprises. In many cases, they could not get the loan at all due to lack of essential qualifications. Therefore, they have to find other unofficial lenders who offer even higher interest rates.
Insufficient collateral assets
To make capital bank loans, SMBs have to offer their assets as collaterals. However, the large portion of SMBs is either limited in assets, or lack of valid documents to prove their ownership over the assets they own.
One-sided investment attention
Banks and investment institutions pay most attention to FICs and SOCs, leaving few opportunities for SMBs. SOCs are exceptionally accessible to huge budget because of the underwriting they have from the government.
Immature stock market
The most important long-term capital calling channel for enterprises in Vietnam is growing quickly, but not efficiently enough. Investment capital flows which are going through IPO are still very small, and stock market in Vietnam contributes only 0.71% GDP compared to 21.7% GDP of other countries in ASEAN-5.
Poor financial support network
Credit institutions in Vietnam are not evenly distributing their services in all regions. Most banks are located in big cities and urban areas, while completely abandon some rural regions. This leaves SMBs in those regions almost no chance to make any leap in business expansion.
Unprofessional credit institutions
Credit institutions do not have diverse services for SMBs. Their staffs are not highly qualify, leading to great difficulties in projects appraisals, collateralized assets management and debt recovery, etc. Credit institutions are not interested in popularizing their services and products to SMBs and in rural areas.
SMBs in Vietnam are facing a lot of problems in capital raising. The Vietnamese government is making efforts to remove these barriers and help this majority part of the economy to thrive. However, this program will take years, even decades to make considerable changes, and that is if the program is perfectly executed. This long-term solution is obviously out of SMBs control, and certainly out of their choice. This circumstance is what LiveTrade, a company specialized in giving investment and financial solutions to enterprises and investors, is working on to change, and that is why the model of DIPO was conducted.
The Digital Initial Private Offering is an advanced a unique investment model developed by LiveTrade. DIPO gives SMBs an optimal and flexible choice when it comes to fundraising projects. Leveraging the benefits of blockchain technology and professional understanding of financial regulations in each market it’s deployed, DIPO can help all SMBs save lots of time and money when looking for the needed capital. But how do DIPO work? What exactly can it do to help the SMBs? Let’s find out here.